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How can a creditor collect from a debtor who won’t pay in Arkansas? One option is to use an enforcement mechanism called garnishment. Garnishment is when a creditor gets a court order requiring some third party, called a garnishee, which has money belonging or owed to the debtor, to turn debtor’s money over to the creditor. If the garnishee is the debtor’s employer, and if the money owed to the debtor is the debtor’s wages or salary, then it’s called wage garnishment, and it’s a very powerful and important tool for creditors to enforce judgments they’ve won in court. (Creditors need legal authority to force a debtor to pay; for most creditors—the IRS is an exception—this means having a money judgment issued by a court after a lawsuit.)

Arkansas Garnishment Exemptions and Non-Exemptions

First, a federal exemption (applies in all states): Social Security can only be garnished for child support, alimony, and a few defined federal debts (primarily taxes).

In addition to the federal Social Security exemption, Arkansas (like most states) exempts several non-wage, non-salary sources of income from garnishment:

Pensions and retirement benefits: several public employee pensions are protected from garnishment, including fire fighter, police, and school employee pensions.

In addition, there is limited protection for certain private retirement accounts, or benefits, such as IRAs.

Public benefits or assistance: Arkansas offers protection for several common types, such as public assistance, worker’s compensation, unemployment, and crime victim’s compensation.

Insurance benefits and annuities: Disability and life insurance benefits are exempt or protected from garnishment in a number of circumstances; also annuity and fraternal society benefits are protected, too.

Overall, Arkansas protects fewer types of non-wage, non-salary income than most states.

Arkansas Maximum Threshold

For all practical purposes, Arkansas follows federal law on how much income is potentially subject to garnishment. That is because federal law is more generous to the debtor than the state threshold, and when that’s the case, federal law controls.

Under federal law, the lesser of the following may be garnished:

25% of disposable income: disposable income is defined as income remaining after taking out only legally required payroll deductions. Since there are not many legally required deductions (the primary one for most paychecks is FICA), 90% or more of most people’s income will be considered “disposable.”

The amount by which a debtor’s weekly income exceeds 30 times the minimum wage, which is designed to ensure a debtor has at least earnings equivalent to working 30 hours at minimum wage on which to live.

Two things to note about the 25% threshold:

1) It’s not 25% of income per garnishment; it’s 25% total that may be garnished.

2) Child support obligations or tax debts allow more than 25% of a person’s income to be garnished. For example, federal law allows up 60%(!) of income to be garnished for child support.

Arkansas Statute of Limitations

The period of time to bring a lawsuit or to enforce a judgment is called the statute of limitations. Arkansas has fairly typically statutes of limitation.

For the most common types of consumer debt—contracts, open accounts, sale of goods, and credit cards—Arkansas limitations periods are:

Open account, credit card, or oral contract: 4 years

Sale of goods: 4 years

Written contract: 5 years

Getting the judgment is just the first step. Once a creditor has obtained its judgment, it has another years in which to enforce it, such as by garnishment. That means that a creditor can afford to wait before trying to collect; for example, since presumably the debtor is in bad financial shape (it defaulted on its debt, after all), the creditor to wait to see whether the debtor gets back on his or her financial feet before looking to enforce its judgment.

Writ of Garnishment in Arkansas

The good news for Arkansas creditors is that an order or writ of garnishment is fairly easy to obtain, once the creditor has a judgment in its favor. The bad news for Arkansas debtors is of course that a writ or order of garnishment is fairly easy to obtain, for a creditor with a judgment against the debtor.

The process of garnishment starts with the creditor, based on its judgment, applying to the court for garnishment. In the application, beside citing the judgment, the creditor needs to state that (1) it has not been paid on the judgment; (2) it believes garnishment is necessary to satisfy (pay) the judgment; and (3) there is one or more garnishees (such as the debtor’s employer) who have money owed the debtor (such as the debtor’s wages or salary) which can be used to satisfy the debt.

Papers will be served on the garnishee, which will need to confirm that it has some of the debtor’s money. (Obviously, if the garnishee does not have the debtor’s money or owe the debtor money—or has or owes less than the creditor claimed—it will have a chance to show that.) Once it is determined that the garnishee in fact has some of the debtor’s money, garnishment will be ordered for the creditor’s benefit.

The debtor does have several possible challenges open to it (see below), but note the following:

Assuming that the underlying debt was properly litigated when the creditor obtained its judgment, this is not the time to challenge whether or not the debtor owes money to the creditor; that should have been done during the previous litigation.

The garnishee can’t challenge the creditor’s basic right to garnishment, just whether and how much it owes to the debtor, or has of the debtor’s money.

Getting Legal Help

When faced with garnishment, it is often worthwhile to retain legal assistance. While, as noted previously, garnishment is not the time to re-try or re-litigate the basic obligation to pay money to creditor, there are still other challenges than can be raised. For example:

1) Is there an error in the garnishment? It’s not uncommon (unfortunately!) for creditors to name the wrong debtor, or not credit payments previously made on a debt. A debtor does not need to pay, by garnishment or otherwise, on the wrong or incorrect debt.

2) Is there something procedurally wrong about the prior litigation/judgment or the garnishment, such as the statute of limitations having passed, or legal notice not having been served in to the proper parties, in the proper way, or within the specified time frame(s)?

3) Is the debtor’s income is mostly or entirely exempt, reducing the disposable income available to garnish? Remember, even though Arkansas exempts fewer types of income from garnishment than many other states, it still has a number of exemptions. A debtor who is receiving income from non-wage, non-salary sources should explore whether—and to what extent—they may be exempt.

4) Is the debtor is already being garnished at or close to the maximum allowable rate on other judgments or obligations, so that there is little or nothing left for the current garnishment?